Matthew Keegan
Nov 1, 2024

What will it really take for adland to divest from fossil-fuel clients?

Financial profit is often attributed as the main reason agencies continue to work with fossil-fuel clients. Experts in the industry argue that stricter regulation and forward-thinking measures are needed to move away from agencies’ over-reliance on fossil fuels.

Photo: Getty Images
Photo: Getty Images

For all the talk about sustainability and tackling climate change, few agencies will sacrifice big clients or revenue streams to take meaningful action. If you needed proof, the 2024 F-List revealed more than 1,000 agencies had contracts with fossil-fuel clients in the past year alone.

Already the United Nations secretary-general António Guterres has called on governments to ban fossil-fuel advertising and warned creative agencies to stop working for fossil-fuel companies, calling advertising and PR agencies “enablers to planetary destruction”.

But what will it really take for agencies to divest from fossil-fuel clients?

According to the Intergovernmental Panel on Climate Change (IPCC), approximately 89% of global carbon dioxide (CO2) emissions come from the burning of fossil fuels, such as coal, oil, and natural gas. 2024 has been the hottest year on record, but the fossil-fuel industry has sought to delay climate action—with lobbying, legal threats, and massive ad campaigns aided and abetted by advertising and PR companies.

"As an industry, we should focus on fossil fuels instead of hiding behind talks about carbon emissions," says Thomas Kolster, founder of Goodvertising Agency. "When we stop fossil fuels, we stop the planet from warming at its source. Let’s talk about how we can help the transition to renewable energy. Let’s stop celebrating the wrong heroes. Let’s stop the greenwashing."

Kolster believes that the fundamental problem preventing agencies from refusing to work with fossil-fuel clients is a lack of industry leadership. 

"We could create a code of conduct as an industry, where those not living up to the code of conduct are not allowed to call themselves agencies,” he says. “Ban any agency or network working on fossil fuel clients to enter any awards. Motivate clients to reward budget to agencies and media that do not have ties with fossil fuels. There are many tools that can be applied from stick to carrot. The solutions are there, the leadership is not."

2024 has been the hottest year on record, but the fossil fuel industry has sought to delay climate action with lobbying, legal threats, and massive ad campaigns.
 

Andy Wilson, founder of sustainability-focused agency Early Majority, feels that it is critical to examine the issue through a financial lens.

"The network agencies responsible for most of the fossil fuel clients are listed and are therefore profit-maximising entities,” he says. “Every network agency is under considerable shareholder pressure to improve profit. Agency management are nervous about losing their jobs if they don’t make their numbers. Senior agency management—many of whom made their careers on the back of fossil-fuel accounts—are heavily bonused on the financial performance of their company."

Given fossil-fuel contracts are not only large, but highly profitable, Wilson is not convinced there is currently enough of an incentive for agencies to divest.

"Until agencies are forced by regulation to relinquish their fossil-fuel contracts, they will continue to take the fossil fuel money," says Wilson. "Unless there are strong counter-veiling financial incentives from the rest of their client base that renders fossil fuel exposure no longer worth it."

Wilson suggests that some of these incentives could be pressure from large incumbent clients to withdraw their contracts if their agency persists with fossil-fuel exposure. This could manifest in the form of decisive action from procurement departments of clients insisting that being 'fossil-fuel-free' is a pre-requisite for agency selection in their RFPs.

And beyond cold, hard financial incentives, the risk and cost of reputational damage to agencies could also generate additional pressure.  

"Awards bodies can play a huge leadership role, as industry accolades are highly valued by agency management and talent," adds Wilson. "For example, making fossil-fuel exposure a disqualifying factor for certain awards and accolades. Increased publicity and advocacy will generate greater pressure, so long as the tactics used ensures continued goodwill from the silent majority in the industry who wants to see an end to fossil fuels."

Dave Murphy, founder of Rewild, says for there to be real change, the narrative needs to move beyond “fossil fuels are bad” to “there’s a more profitable future elsewhere”.

"We need to figure out how we can inspire agencies with the opportunity, rather than simply shaming them with guilt," says Murphy. 

Clean Creatives, publishers of the F-List, currently has a pledge where creatives pledge to decline work with agencies that retain fossil-fuel industry clients. Yet, while this pledge sets a moral line in the sand—which is a good start—some believe what's really needed is structural change.

"It’s not enough to rely on creatives to walk away from work; we need to incentivise the best creatives to channel their talents into sustainable industries," says Murphy. "This is where the government could play a healthy role. They—and industry bodies—could create something like a 'clean creatives' initiative (eg a subsidy) where they support the brightest minds inside agencies to do their best work in selling the vision of a sustainable future."

Duncan Meisel, executive director, Clean Creatives, says that 1,200 agencies have taken the Clean Creatives pledge not to work with fossil-fuel polluters, and are using that as the jumping off point to become genuine leaders in sustainability communication.

"The rest of the industry would benefit from following in their footsteps and looking for more creative ways to contribute to climate action," says Meisel. "Stopping work with fossil fuels is an essential step towards making the ad industry a part of the climate transition. Everyone needs to do their part, and this is one of the most important contributions the ad industry can make."

Beyond pledges, some have proffered the possibility of a complete ban on fossil-fuel advertising, after the UN chief, António Guterres, earlier this year called on governments and media to enact such bans, as they have done with tobacco.

Last month, the Dutch city of The Hague became the first in the world to approve local legislation banning advertising for fossil fuels. Legislation puts a stop to officially and privately supported advertising for petrol and diesel, aircraft, and cruise ships in the streets of the Dutch city, including billboards and bus shelters. It takes effect at the start of next year.

 
In September 2024, the Dutch city of The Hague became the first in the world to approve local legislation banning advertising for fossil fuels.
 

"A complete ban on fossil fuel is very unlikely in developed countries," says Wilson. "Governments view fossil fuel as a central part of their energy security, and the relationship between the fossil-fuel lobby and governments runs very deep. The IMF estimate that fossil fuel subsidies amounted to USD $7 trillion in 2022—which is the equivalent of 7% of global GDP, and more than what is spent on marketing in total."

Rather than a complete ban, we’re likely to see a reduction in opportunities over time to be able to advertise fossil fuel products, and those formats will become more restricted—much like tobacco advertising.

"But much like tobacco advertising, creatives will still find a way to get their message across effectively," says Ben Matthews, co-founder, Empower. "My bigger hope is that it doesn’t become economically viable to put as much spend behind fossil-fuels brands. I hope that clean tech brands become such an economically dominant force that the momentum is with them and it’s natural to put spend behind more climate-conscious brands compared to the ones that are killing the planet."

Ban or no ban, Mesiel says that agencies should be preparing for a very different landscape for fossil-fuel advertising in the near future.

"The number of lawsuits filed against fossil-fuel companies for misleading the public has tripled in the past decade, and clean energy is deploying faster than anyone could have predicted. Fossil fuel advertising could disappear rapidly, whether it's due to a weakening financial position, or legal requirements to stop misleading marketing,” he says.

The outlook is not all bleak. Clean Creatives found that annual investment in clean energy is now double that of fossil fuels. More electric cars were sold in the first quarter of 2024 than in all of 2020. 

Yet, while the creative industry could be a natural ally to climate action, fossil-fuel clients continue to stand in the way. 

"I fear a ban on fossil-fuel advertising is a place to start but it won't have that much impact," says Gavin Anderson, CEO, Just Carbon. "But the impact the marketing world can have is immense, they actually hold all of our futures in their hands. The marketing world holds the keys to helping save the planet, they have the voice, the ideas, and a lot of the time can help drive client opinions."

As the most recent F-List highlights, many agencies are still deeply embedded with fossil-fuel clients, but there is growing optimism that the momentum is with forward-thinking agencies who reject fossil-fuel brands. 

Empower’s Matthews says: "I predict the F-List will soon act as the Z list for agencies that talent and brands want to avoid."

 

Source:
Campaign Asia

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